THE APPLICATION OF EQUATED YIELD AND REAL VALUE APPROACHES TO MARKET VALUATION: I: The Logic of Techniques and the Analysis of Comparables

Abstract

Equated yield and other contemporary investment valuation techniques are usually defended as techniques which are relevant for the analysis of market values or prices, but not relevant for market valuation. Part one of this paper investigates the reasons behind this view and suggests that a proper technique should have a logical base and be as objective as possible in the use of comparables. Each part concentrates upon the Market Valuation of freehold reversionary property investments. The logic of both conventional and contemporary techniques is investigated by examining the changing perceptions of investors since the Second World War. It is concluded that equated yield techniques can lay claim to a logical base. The analysis of comparables by each method is then examined and it is concluded that, at this stage of a valuation, equivalent yield analysis is objective but equated yield analysis requires subjective assumptions. This conclusion is re‐examined in part two of the paper.

Citation

CROSBY, N. (1986), "THE APPLICATION OF EQUATED YIELD AND REAL VALUE APPROACHES TO MARKET VALUATION: I: The Logic of Techniques and the Analysis of Comparables", Journal of Valuation, Vol. 4 No. 2, pp. 158-169. https://doi.org/10.1108/eb007991